How to study strength and weakness in financial trends

If there trend is your friend, what do you do those days when it is not?

The trend in the market changes in blips. For consistent success, it is important to pay attention in shifting forces of supply and demand. After all, it’s the future where there is money to be made. To understand this article I assume you have knowledge on how to: define your structure (Areas where future price action will move), define trends (up trend, sideways trend, down trend).

Below is an image of a structured battlefield. An uptrend is spotted by a series of higher highs and higher lows, a side ways trend is spotted by multiple swings projecting around the same area, a down trend is spotted by a series of lower highs and lower lows.

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A practical method to identify strength and weakness in any market

Step One : Compare the momentum of the current price swing with the momentum of the previous price swing in the same direction, is the price fast or slower than before?

Slopes to expect

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The mind is capable of approximating any trend to the above slopes. The future trend is in the direction of strength and against the direction weakness. When the mind is confused about slopes, it is best to look for another pair. When using this approach it is important to be familiar with climatic moves as they occur in a visual form of strength while effectively a sign of weakness.

Step two: Examine Projection and depth: Increased projection is a sign of trend strength, decreased projection is a sign of trend weakness. Increased depth is a sign of trend weakness, decreased depth is a sign of trend strength.

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Finding weakness in financial markets help make sure your setups are in the direction of strength and against the direction of weakness. This method is one of the most practical and easy way to approximate weakness within trend, the are other methods such as those found in “Volume Spread Analysis”.


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